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Irina Slav

Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

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EU Fails To Agree On Energy Reforms

  • On Monday, the European Union failed to agree on proposed reforms to its energy market that were designed to decouple the price of electricity from the price of natural gas.
  • The failure to agree upon the reforms was due in large part to the last-minute proposal about extending state support for coal power.
  • While the EU is eager to come up with a solution to avoid price spikes in the future, members have very different attitudes about different sources of power.
EU

The European Union failed to agree on proposed reforms to its energy market after a last-minute proposal from rotating president Sweden about extending state support for coal power.

The outcome of Monday’s meeting was expected as EU members have markedly different attitudes to coal and its importance in national energy mixes.

"For some of us, security means capacity markets," Poland’s energy minister Anna Moskwa said, as quoted by Reuters.

Poland generates some 70% of its electricity from coal. It is also building up nuclear generation capacity to diversify.

Yet the EU also had differences in state support for wind, solar, and nuclear, Reuters reported. Some countries, including Germany, the Netherlands, and Austria were opposed to the idea of offering fixed-price contracts not only to wind and solar energy generators but to nuclear and other power generators.

France, on the other hand, is very much in favor of this idea, which was to be expected given its massive nuclear capacity, which generates about two-thirds of its electricity.

"This could lead to market distortions as large parts of the markets could become inflexible, and also to a distortion of a level playing field concerning the prices in Europe," Germany’s economy minister Robert Habeck said.

On the other hand, the restriction of fixed-price contracts only to certain power generators "endangers the objective of security of supply and of protecting consumers," French energy minister Agnes Pannier-Runacher said.

The EU power market reform aims to decouple the price of electricity across the European Union from the price of natural gas and instead tie it to the price of electricity generated by wind and solar installations.

The idea is to lock in prices over a longer term under power purchase agreements with businesses and so-called contracts for difference with the government to avoid the surge that Europeans saw last year.

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By Irina Slav for Oilprice.com

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